Paying Corporation Tax

Who pays HMRC corporation tax?

Taxable profits of a business include the earnings of the company from trading activities, business investments, and profitable gains. For a company based in the United Kingdom, it is liable to pay corporation tax on profits made from the UK business and abroad. Whereas, if the company is not based in the United Kingdom but has branch offices in the UK, it is only liable to pay the corporation tax on profits earned from the UK activities.

The Business Must Pay HMRC Corporation Tax on Profits Earned from Doing Business As:

  • A overseas company with a United Kingdom branch or office
  • A co-operative or club or community group
  • A limited company
HMRC Paying Coporation Tax

Mandatory steps for a business for Corporation Tax

  1. When an individual starts dong business, he / she must register the business for corporation tax. Unincorporated associations should write to HMRC
  2. The business must keep accounting records and books of accounts. The business must prepare a company tax return to compute the payable corporation tax
  3. Pay the corporation tax due or report to HMRC if no tax is due by the due date. This is normally nine (9) months and one (1) day after the end of the accounting period
  4. File the company tax return before the deadline. This is normally 12 months post the end of the accounting period

HMRC Corporation tax payment deadline

The cut-off date for paying the HMRC corporation tax due depends upon the taxable profits.

What about the Interest rates for late and early payments?

Up-to £1.5 million taxable profit

The business must pay the corporation tax due or report to HMRC if no tax is due by the due date. This is normally nine (9) months and one (1) day after the end of the accounting period.

More than £1.5 million taxable profit

The business can pay the corporation tax in installments. In general, large companies can pay the corporation tax online by installments. A large company is defined as a company whose profits for an accounting period are more than £1.5 million at the end of the period. There are some exceptions. Some companies don’t have to pay by installments even if its profits exceed £1.5 million. This happens if either:

  • The total liability amount for an accounting period is less than £10,000 (or if the accounting period is less than 12 months)
  • The company's profits for the accounting period does not go beyond £10 million and either of the following applies:
    • At any time during the preceding 12 months, the company didn't exist or did not have an accounting period
    • For any accounting period which ended in the previous 12 months, either its annual rate of tax liability did not exceed £10,000 or its annual rate of profit didn't exceed £1.5 million

If any of these conditions apply, the company is liable to pay tax in full by the normal payment due date

Pay Your Corporation Tax Bill

It is imperative that a company pays the tax due to the HMRC by the cut-off date. The HMRC may charge interest if the tax is not paid on time. On the other hand, HMRC will pay interest if they receive the tax early. The time period allowed depends on how the payment is made:

Same day or next day

  • Telephone banking or online banking (Faster Payments)

Three (3) working days

  • At the post office
  • At the bank
  • Online by debit or credit card
  • Direct debit
  • BACS

Five (5) working days

  • Direct debit

Note: Corporation tax cannot be paid by post. In case, the cut-off date falls on a weekend or on a bank holiday, the company must make sure that the payment reaches the HMRC one day prior to the holiday.

Bank details for online or telephone banking, CHAPS, Bacs

Companies can pay HMRC by CHAPS or BACS. Companies can use the 17-character corporation tax pay-slip reference for the accounting period they are paying for. The pay-slip reference number can be found on the pay-slip sent by HMRC, after the return was submitted or through the online HMRC account under view account -> accounting period.

Account name Sort code Account number CHAPS instruction
HMRC Cumbernauld 083210 12001039 CHAPS form - Cumbernauld
HMRC Shipley 083210 12001020 CHAPS form - Shipley

Overseas account details are as follows:

Account number (IBAN) Bank identifier code (BIC) Account name
GB62BARC20114770297690 BARCGB22 HMRC Cumbernauld
GB03BARC20114783977692 BARCGB22 HMRC Shipley

Multiple payments by CHAPS

It is possible to make multiple payments using CHAPS – An online CHAPS form can be used to make a single payment for multiple companies for the same accounting period

HMRC’s banking address is:

Barclays Bank PLC

1 Churchill Place, London

United Kingdom E14 5HP

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Corporation Tax HMRC:

The online corporation taxation service can be used to file the organisation’s or limited company’s tax return with HMRC. Businesses can also use this service to file accounts together with Companies House. There might be occasion when the online service is slow during peak business hours. To use the HMRC Corporation Tax service companies need:

  • User ID and password provided for Government Gateway
  • Company accounts
  • Ready calculation of Corporation Tax
  • Supporting documents, such as claims for relief, if any

Business will need the Companies House password and authentication code, if accounts are filed jointly with the Companies House

Company accounts

Companies can create online account templates and can upload either:

  • The limited company statutory accounts
  • Accounts needs by the unincorporated association's rules

HMRC webinars, email alerts and videos

Companies can get supplementary help and support from HMRC through videos, e-mails, and webinars. They include information on:

  • International trade
  • Value added tax
  • CIS
  • Self-employment
  • People employment / hiring staff

Corporation Tax Advisors - DNS ACCOUNTANTS

DNS Accountants is an experienced taxation and accounting firm in the United Kingdom, which offers entire range of corporation tax planning services for owner-managed businesses across the country. DNS helps businesses understand their tax structure and compute the amount of tax payable. The team at DNS comprises of Chartered Accountants, and accounting and MBA professionals that help clients with their tax credits and services such as bookkeeping, auto-enrolment, accounting, self-assessment, and payroll-management and business start-up. Employees / employers can use DNS Accountants online cloud-based accounting software, Nomisma Solution, helps businesses to have a better understanding of their corporation tax liability. The firm is very principled & delivers supreme customer service and client support.

DNS Accountants help clients focus on maximizing their wealth. It’s impractical to expect any small-business owner to have a comprehensive knowledge of tax and National Insurance rules, DNS Accountants work with businesses to work out their HMRC corporation tax dues and business tax planning.

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